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Pakistan is fast losing the market for its products in Afghanistan owing to frequent changes in federal government policies coupled with a greater focus on security instead of trade.

Resultantly, Pakistani items are being replaced with Indian and Iranian exports in the war-torn country.

Afghanistan was Pakistan’s second-biggest export destination after the United States until 2011. Presently, China has acquired this position, followed by the United Kingdom and Germany.

The fact that in the past two decades improving trade relations with Afghanistan has not been a priority for Islamabad is a major concern for the country’s exporters. Recent border closures have also increased problems for exporters.

“When it comes to Kabul, why are we so quick to close the border over every incident? Islamabad needs to shift from a security-centred policy to an economic one,” says a businessman affected due to decline in exports to Afghanistan.

There are several reasons, both internal and external, for the decline in exports to Afghanistan.

Internally, Afghanistan is not on a priority list of the federal government. The Ministry of Commerce has recently approved a package to promote exports to the African continent while ignoring issues that hinder exports to Afghanistan.

‘When it comes to Kabul, why are we are so quick to close the border over every incident? Islamabad needs to shift from a security-centred policy to an economic one,’ says a businessman affected due to fall in exports to the neighbouring country

Similarly, the government is unwilling to remove the restriction for exporters who want to avail schemes like DTRE and manufacturing bonds for exports to Afghanistan.

The recent restrictions on visa and travel have also affected the business community badly. There is a great potential for pharmaceutical exports to Afghan­istan, but ad hoc rules controlling drug prices are an impediment.

Poor infrastructure at borders also adds to the problem. The Ghulam Khan port in Waziristan has yet to be made functional for exports. While an Asian Development Bank-funded project to build modern land ports at Torkham, Chaman and Waga border points has been initiated, the pace of work on these projects is slow.

As part of this project, the government has yet to establish the land port authority which will oversee the project and its implementation.

Externally, international donor funding in Afghanistan dropped for development projects. It has also been reported that NGOs have likewise stopped development operations in Afghanistan.

KP Chamber of Commerce and Industry President Zahid Shinwari said that local investors in Afghanistan also hesitate to invest in real estate. “Not a single big factory has been established in the last couple of years in Afghanistan,” he said.

Mr Shinwari claimed that Indian and Iranian products have replaced Pakistani exports as Kabul has imposed high tariffs on Pakistan dominant products like juices, cement, pharmaceuticals and PVC pipes.

The frequent changes in federal policy have mostly impacted the provinces of Balochistan and Khyber Pakhtunkhwa. Senior vice president of Pakistan Afghanistan Joint Chamber of Commerce and Industry, Daroo Khan Achakzai, said the ill-advised changes in policy have led to falling exports to Afghanistan.

He said the imposition of regulatory duties, especially on fresh and dry fruits, granite and marble, would encourage transit of these products to other countries from Afghanistan. “We import these products from Afghanistan and re-export them after some value-addition,” Mr Achakzai said.

He said that on the import of these products no foreign exchange was involved as fresh and dry fruits are importable against the Pakistani rupee from Afghanistan.

While potential for trade exists, business with Afghanistan has suffered due to improper and changing policies

Earlier, he said that while Afghanistan was exempt from the ambit of regulatory duties, not a single cement container was exported to Afghanistan via the Chaman border last year because of cheaper Iranian cement available in Afghanistan.

After the switch from trading in the rupee to the dollar in January 2014, Mr Achakzai said exports from Balochistan dropped substantially. Claiming due to the high cost of the banking transactions traders opt to smuggle across the porous border.

In transit trade, Pakistan has lost its position of first choice to Iran. Tehran offers many facilities from handling to onward transportation. In Pakistan, the cost of handling and transportation increased substantially over the years.

Data shows that the number of cargo containers fell from 75,300 in 2009-10 to 49,500 in 2014-15. This decline was the outcome of the change in transit agreement with Kabul.

Mr Shinwari claims that high container detention charges, a monopoly of shipping lines and the absence of a shipping line regulatory authority in Pakistan make the process unfeasible.

Some changes in the transit treaty revived the flow of containers before it fell once again owing to closure of border in the year 2016-17. In 2015-16, the number of 20-foot containers travelling to Pakistan increased to 84,600. However, this fell to 70,300 in 2016-17 after repeated border closure.

Unless Pakistan and Afghanistan revive talks on transit and other bilateral issues the full potential of trade may not materialise.

“The KP businessmen have suffered due to these policies,” Mr Shinwari said, pointing out the province’s dependency on the Afghan market. “We have almost lost that market,” he said.

Owing to cultural and language similarities, potential for trade exists in the service sector in education, healthcare, and information technology.

Published in Dawn, The Business and Finance Weekly, October 23rd, 2017

On DawnNews

Comments (90) Closed

Pakistan blocked the exports of india to afghanistan through their country. Thats why India decided to develop port of chabahar in 2016.

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Syed Mudassir

Oct 23, 2017 09:54am

We should cost benefit analysis. Boarder is open, we made USD 2.5 million in trade but then a suicide bomber cam across the border and blow him self and Pakistan Stock Exchange loose 1000 points, foreign companies withdraw their business causing unemployment etc and lot of other issues. I think the boarder should be closed, trade should be made via proper channels that means smuggling. We will get the ground again in afganistan.

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Sha b

Oct 23, 2017 11:05am

Before winning the trade win the hearts.fundamental rule.

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Zahid

Oct 23, 2017 12:34pm

As 2 bigger provinces i.e Punjab and Sindh exporters are not directly affecting from this boarder closure and trade barriers hence this practice will prevail in future as well. Hard luck for KPK and Balochistan.

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saneev

Oct 23, 2017 01:11pm

The consumption may not have reduced but smuggling certainly has increased.

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RaGa

Oct 23, 2017 03:55pm

Complete work of land ports should be subjected under CPEC so that the Chinese companies can be complete it within time schedule.

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M.M.Amin (Old Ravian )

Oct 23, 2017 03:57pm

This is Avery complex issue .over riding factor is the national security; and this is so right from the birth of Pakistan .Afghanistan was the only country that opposed Pakistan’s joining the UNO .Over time their hostility , promoted by India , has grown .Be this as it may , we need to promote Exports world wide .
Well discussed Dawn .

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MG

Oct 24, 2017 07:19am

Pakistan has miserably failed in prioritizing people interest. 70 years are over and no sign of changing the gear.

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Ali

Oct 24, 2017 08:52am

Who cares. We should rather have good ties with India then Afghanistan. India atleast dont change faces like Aka Afghanistan do.

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Abid Rehman

Oct 24, 2017 09:00am

Transit trade is harming pakistan economy . 90% of goods are brought back after custom authorities takes bribes. The rate is 2- 10 lac per container.

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Umar Farooq

Oct 24, 2017 09:05am

Security and respect of nation above all else. Afghans are an ungrateful lot who are blinded by India's propoganda. Let them trade with India and have fun. Our lives are more important than the dollars these terror merchants can provide. We've replaced them with China, UK and Germany. Let's concentrate on that.

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Farrukh Hussain

Oct 24, 2017 09:13am

Security is top priority!!! Education, trade comes later!!!

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Ali

Oct 24, 2017 09:13am

Pakistan should start bridge gap with india. Afghanistan will automatically come in line.

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Niaz khan

Oct 24, 2017 09:23am

@Shivam .this so calld chbahar and aircorridor is not feasible and totaly failed for poor afghans

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asad

Oct 24, 2017 09:30am

Pak should focus of building cement manufacturing units in Afghanistan to cater need at home and locals.

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Aakash

Oct 24, 2017 09:31am

Security is a important factor but economic factor is a lifeline for any country. There is acute need to change our focus from security to economy. It cause a enormous shame when hear on international media that Pakistan yet dependent on foreign donations.Still we hear Pakistan near to default or bankruptcy. Whatever we did in past, forget it. Our policies didn't succeed us in last 70 years in economy, so let's start from the beginning with full focus and thinking on economy.

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Khan De Bannu

Oct 24, 2017 09:34am

@Zahid
you can't decide us by such tactics.

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Adnan Qamar

Oct 24, 2017 09:52am

Pakistan's exports to Afghanistan have declined because the Afghan government hates anything Pakistani. We should instead focus on building trade with India. Kashmir issue aside, India and Pakistan can have a mutually beneficial relationship.
The world has changed. Alliances are built on trade and financial and economic interests. Gone are the times when superpowers pumped billions to support puppet regimes in third world countries.

Seal the border 100%. No country will ever become rich by having Afgjanistan as an export destination. Our future lies with CPEC and export to the rest of the world. Instbility, violence, hostility and terrorism from Afghanistan is not worth our efforts.

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Jabbar

Oct 24, 2017 10:17am

Today Afghanistan president signed the order banning all Pakistani trucks entrying in to Afghanistan. It is due to expiry of trade agreement. All goods now should be reloaded to Afghanistan trucks at the border like India/Pakistan border. Pakistan refused to allow Afghanistan to bring their essentials goods from India through Pakistan.

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Hameed

Oct 24, 2017 10:31am

Security is more important trade with Afghanistan.

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Khan

Oct 24, 2017 10:41am

Good for pakistan

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Tango Tango

Oct 24, 2017 11:14am

Lets fight with all our neighbors! What a wonderful way of life of we the righteous and the pious of them all. Dunya pagal hai ya phir mai deewana! With delusions of grandeur that are typically possessed by slaves and sub-servant people we live live like crooks and truly believe that there is honor among thief's. Live long and suffer for there still are new lows to swoop down to.

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Kaleem

Oct 24, 2017 11:15am

@Syed Mudassir Trade or no trade, suicide bombers can come from Afghanistan anyway. Its better to implement better procedures and start trading.

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Mansur ul haque

Oct 24, 2017 11:18am

We have geographical advantage in having trade relationship with Afganistan. Why to lose Afganistan market. We are in the process to improve our relationship with Afganistan. This must also include enhancement in trade relationship. Efforts are made to improve our trade relationship with Euorape and America. Improvement in trade relationship with Afganistan requires less expenses and moderate efforts. Recently Afganistan has been granted test status by ICC. It is time that cricket test match may be arranged between Pakistan and Afganistan at Miranshah (Fata) that will result in trade and political relationship with both the countries.

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NaaAhl

Oct 24, 2017 11:22am

Utter nonsense. Afghanistan wouldn't survive a day without Pakistani goods.

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IAhmed

Oct 24, 2017 11:25am

''When it comes to Kabul, why are we are so quick to close the border over every incident? Islamabad needs to shift from a security-centered policy to an economic one'', only a businessman can say this; a common Pakistani want a secure life than thinking of business

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Abhi

Oct 24, 2017 11:29am

China don't want pak to do business in Afghan it wants the relations to spoil and cApture the Afghan market.Smart chinese

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Pir Roshan

Oct 24, 2017 11:48am

One of the proposal is to replace the loss of trading jobs in KP & Baluchistan is to recruit 30000 troops to guard Durand Line. Dont know who & how we will pay for it.

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Pir Roshan

Oct 24, 2017 11:54am

@Syed Mudassir ...No sane person will buy this argument. Suicide bombers do not care about boundaries, they have proved time & again they could access the safest of military installation.

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only

Oct 24, 2017 11:58am

@NaaAhl
That sums up your IQ and GK.

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RAJA CHILL

Oct 24, 2017 12:16pm

CPEC can't connect to central Asia without Afghan being in good relations for that they need to treated as equal partner.( As Pakistan expects India to treat it )

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Shaheen S.

Oct 24, 2017 12:17pm

@Ali "We should rather have good ties with India then Afghanistan. India atleast dont change faces "

India has already provided Most Favoured Nation (MFN) to Pakistan, for trade. What have we done with it? We haven't even responded with a similar gesture. If we continue to hold bilateral relations with India as ransom for Kashmir resolution, we will continue to lose economically while India zooms far ahead.

To teach Afghanistan a lesson !!! Increase their economic costs .... even if it ends up costing Pakistan Much More... Logic Seen in many village communities.... Sorry Pakistan we are talking about the Government Attitude - Pak people themselves are like any other people....

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Your Friend

Oct 24, 2017 12:23pm

Dont worry ... after CEPEC Chinese Goods will flood the market.... Shortages will be a thing for the Past.... Has anyone been to the Dragon Market /International City in Dubai..... once a dragon market comes in any area no one can manufacture and sell anything else in 400 Km Radius....

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Saif Zulfiqar

Oct 24, 2017 12:36pm

Afghans do not have power to buy anything, that is why there are 3milions Afghans in Pakistan. Send them back to Ghani or Modi and close the borders. .

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Garima Gautam

Oct 24, 2017 12:57pm

@Ali well said

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Wardak

Oct 24, 2017 01:02pm

the comments section highlight few things which is that Pakistanis are living in delusion that Afghans won’t survive without a day if Pakistan close its border. I am afraid you all wrong , Afghans are no more reliant only on trade with Pak and gone are days when trade agreement were dictated to Afghanistan. Every bilateral agreeement will be agreed on equal terms!!!!!

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James Kapoor

Oct 24, 2017 01:10pm

"Pakistani items are being replaced with Indian and Iranian exports" - Good for Indian exports. Pakistan is losing the competition and should try to bounce back.

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Nitin

Oct 24, 2017 01:19pm

@Farrukh Hussain really that's what you think. All the three things comes simultaneously not sooner not later

Pakistan is hell bend on making itself irrelevant in the region with its own policies which has no chance to change.

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INDIAN

Oct 24, 2017 02:34pm

Pakistan has to be open minded and has give access to Indian market for Afghan goods. You cannot do trade with this narrow minded.

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Zak

Oct 24, 2017 03:01pm

While people die in pakistan due to indian inspired terrorism through Afghanistan, economics cannot be a priority. Once CPEC gets into swing, Afghanistan will have a choice to join it fully and knowing Afghan's, they will not lose that opportunity for anyone. Only country left on the sidelines gawking will be India. Pakistans aim should be to get CPEC going and connecting Central Asia via Iran and Turkey. Our 'friends' and foes are doing everything to prevent it because they know its succesful consequences. If the enemy does not like, then do it more, as it shows you are doing it right.

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Zak

Oct 24, 2017 03:02pm

@Shivam ..and chabbar is a loss making venture which will hit the poverty stricken india even harder. India lives on borrowed money.

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Muhammed Asim Rao

Oct 24, 2017 03:11pm

Afghan border has been the biggest source of drugs entry into Pak (and not to forget Terrorists too) - and most of their trade was infiltering illegal smuggling into Pak - thus creating a problem with local suppliers of those products. I would say - it would be better to have CONTROLLED trade with our neighbour - eventually they have to find products that are cheaper and being in close proximity and their most of population closer to our north side - they have to revert back - eventually

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ISH

Oct 24, 2017 04:16pm

@Khwarizmi With CPEC China will export its stuff to the world ...what will you export or do you plan to compete with China?

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ukumar

Oct 24, 2017 05:22pm

@Saif Zulfiqar What is Modi got to do with Afghan refugees?

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AdNan 2

Oct 24, 2017 05:55pm

@MG
Chahabar port failed miserably. Shame.

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Usman another Canadian

Oct 24, 2017 06:31pm

Indian goods will always cost more than Pakistani and Iranian goods as Indian goods have to be loaded shipped unloaded in Chahbahar than trucked through the mountains of Iranian Sistan-Baluchestan. Pakistani goods from almost anywhere in Pakistan can be put on rail and shipped to Peshawar. Right now cost is not an issue, as the US, Europe and India are subsidizing the cost, but that isn't going to last forever. No amount of politics, can overcome geography and economics in the long run. Especially in the case of landlocked Afghanistan, Iranian goods will always be king in Western Afghanistan, Pakistani goods in Eastern and Southern Afghanistan.

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LILLY

Oct 24, 2017 06:37pm

@Syed Mudassir Try closing the border and see how the economy suffers. You don't seem to understand the cost benefit analysis properly. If it just a product sale you can go as per theory but this is relation between two countries which will also include sentiments. When you close the border, the trust deficit widens and how will you perform a cost benefit analysis on that?

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LILLY

Oct 24, 2017 06:41pm

India will be a $6 Trillion economy by 2027.

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lastsamurai

Oct 24, 2017 07:05pm

Trade to neighbouring countries is very crucial due to reduced distance and transit complications. Pakistan's trade across it's largest neighbor is non existent. Thanks to US embargo, Trade with Iran is very negligible, Afghanistan is also deteriorated. Now only trade option is China while is quite a difficult terrain to mainland China not to mention non flexible trade laws and trade deficit with China. Pakistan needs a overall policy revamp if it wants to keep up in trading World.

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SYED HASSAN HASEEB

Oct 24, 2017 07:35pm

as a common man my interest is first pakistani products and secondly imported products to be send to afghanistan with out any delay . there should be a force to handle continuous clearance of these products into afghanistan . this will help our small business to keep alive . pl take some interest in iran our products are liked there we should get some share as well. i am very surprised pak is a country they always have problems with their neighbour why last seventy yrs we have never enjoyed relationship with iran , afghan and india pl do some thing about it.

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karr

Oct 24, 2017 08:10pm

@Syed Mudassir So all suicide bombers are from Afghanistan ?

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Akram

Oct 24, 2017 09:19pm

@M. Emad since there is no border between india and afghanistan its not going to be much of a trade corridor is it?

Afghanistan does not even have a port of its own, its having to use an iranian port.

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Akram

Oct 24, 2017 09:21pm

@Shivam the ports on the Pakistani side are far cheaper to use than Chabahar. This is why chabahar will be nothing more than an 'also ran'.

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Akram

Oct 24, 2017 09:23pm

@Clarification you obviously know nothing about CPEC, it stands for China Pakistan Economic Corridor, what has it got to do with Afghanistan?

The route does not even enter Afghanistan!

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Pravin

Oct 24, 2017 11:01pm

Dear pakistani brothers this is the time you need to understand who’s is your real brother.
And it’s better you understand for your welfare.
The country you most hate and you find a enemy, will do the trick trust me.
A brother never hurts a brother.
It’s just need a rethinking.
God bless you.

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Komal s

Oct 25, 2017 01:22am

@Khwarizmi how is cpec going to help Pakistan export more to rest of the world. Without Afghanistan you cannot connect to Central Asian countries. You anyway had access to your ports before cpec to export to other countries. Of course that you can export to China using cpec. But common sense tells us that there will be more goods coming your way from China. Good luck.

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Khan Khana

Oct 25, 2017 05:40am

Our products are not cost competitive in foreign markets. In fact even in local market hence we see Pakistan markets flooded with foreign goods. Government must pay attention to this problem.

Who is going to pay for CPEC construction costs and exorbitant Interest rates when the nation can barely afford IMF rates? I guess the mortgaged land and assets will belong to China and make Pakistan a leading debtor nation. Xi's vision is now in the constitution.

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Younas kakar

Oct 25, 2017 10:10am

Long live Pak Afghan Yar!

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Sunil Kumar

Oct 25, 2017 12:18pm

Yes it is true

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Wahab

Oct 25, 2017 02:16pm

@Zak Poverty stricken India? India living on borrowed money? Surely your are talking about pakistan. By the way I also agree that when your enemy complains the most that means you are doing something right. I support Modi's policies as it has made our enemies squeal the maximum.

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Peacenik

Oct 25, 2017 02:48pm

Pakistans main export does not make it onto official export statistics. Time to stop safe heavens/tax free zones for main export

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Mirza

Oct 25, 2017 06:22pm

Lets Afghans rot without the Pakistani wheat sugar and other commodities.

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funny

Oct 25, 2017 06:37pm

its so ironic to see pakistanis talk about trade and economics...like the rest of the world is begging for pakistans trade goods...

maybe you can export your famous mangoes ...Learn your place.

pakistan was nothing but a well planned buffer state created to secure india

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Farhan

Oct 25, 2017 10:50pm

When countries are trying hard to promote and gain newer markets we are discouraging our businesses to develop their businesses. If we cant do trade with our neighbors then how could we do trade with the world. what is the use of CPEC when we are closing our almost all the boarders with India, Afghanistan and Iran. Depriving our people for cheap and needed goods is itself the crime against our citizens.

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Farhan

Oct 25, 2017 11:00pm

@M.M.Amin (Old Ravian ) Almost 30 years we had open walk in Afghanistan since 1970s with super power as friend pumping money and weapons through us. Blaming Afghanistan and India now is too much to digest. We received billions when elsewhere countries were reeling under poverty. we need to accept our faults and get out of security state mindset. We lost all our wars which we initiated. We lost our sponsored govt. in Kabul. We lost all the muslim countries as our friends. today we are regionally and internationally isolated. Most of the blame is on us and we are in denial. over 40% of our population have stunted growth, drink poisonous water, just 46% kids end up going in schools but madrassa are thriving. Leader after leader have amassed welath and we point out finger to neighbor for our failures. Wake up and change before we loose the existence!

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Farhan

Oct 25, 2017 11:05pm

@RAJA CHILL Exactly! All our regional actions seems to sabotage the CPEC efforts. If CPEC fails we will blame India and Afghanistan while China will succumb us to pay the 48 billion debt back.

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Ali

Oct 25, 2017 11:13pm

@LILLY yeah but 6 trillion split between 6 billion people is still peanuts. Per capita GDP for India Is higher than Pakistan by only 300 dollars or so.

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OZ

Oct 26, 2017 02:08am

Don't forget what President Ghani has said. He will not allow CPEC through his country unless Pakistan allow India to use Pakistani routes to Afghanistan.
Afghanistan is nothing but Indian Pawn.

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clarification

Oct 26, 2017 02:21am

@Akram " you obviously know nothing about CPEC, it stands for China Pakistan Economic Corridor, what has it got to do with Afghanistan?"

The purpose of CPEC was to allow land route to China to central Asian countries. This requires Afghan to provide transit which was taken for granted. Else what exactly is it supposed to do. If the purpose was to export from Gwadar, you could do the same from Karachi port also, isn't it?

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clarification

Oct 26, 2017 02:25am

@Usman another Canadian "No amount of politics, can overcome geography and economics in the long run. "
Does China not export to USA? Is it due to geographical advantage?

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Javed

Oct 26, 2017 08:43am

Because we can... problem is we can not afford to keep it closed permanently.

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Jawad

Oct 26, 2017 09:16am

As long as the puppet regime stays in Afghanistan, I don't think its feasible to open borders.

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JPG

Oct 26, 2017 09:18am

"One of the proposal is to replace the loss of trading jobs in KP & Baluchistan is to recruit 30000 troops to guard Durand Line. Dont know who & how we will pay for it."
@Pir Roshan

Very good suggestion.. The stability in Baluchistan would help CPEC the most. so, china should be asked to pay for the recruits..

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Husnain

Oct 26, 2017 09:39am

@Shivam you mean how much altruistic India is in Afghanistan.
The investment is only for trade & diplomatic relations ?

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Asad

Oct 26, 2017 09:45am

@Shivam Good for India, enjoy!

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KRIS

Oct 26, 2017 10:49am

When it comes to trade, Pakistan has put all its eggs in one Chinese made basket!

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SCP

Oct 26, 2017 11:16am

@Shaheen S.

Agree. This is what actually happening.

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shankar

Oct 26, 2017 12:35pm

@Usman another Canadian Then how come Chinese goods are flooding every market? Trade does not depend on geographic proximity. It depends on economics.

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jamshed

Oct 27, 2017 08:39am

@M. Emad And poor BD is still waiting for such favor from India. Looks like you or your nation has no self esteem. To you peddling Indian cause is more important than anything !!

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Nagababu

Oct 27, 2017 09:06am

@Zak
You think cpec as something India care. We have objection because it passes through indian territory. Cpec cost 45 billion $ which is a loan from China.
Indian cabinet approved infrastructure development worth 7 lakh crore ₹ ( 100 billion $) by our own money.